Guest Editor's Introduction

Sullivan R. Lawrence

Chinese Economy, 2001, vol. 34, issue 4, 3-5

Abstract: Quoted in the following third segment of He Qinglian's pathbreaking book, >i>China's Descent into a Quagmire>/i>, this popular limerick in China captures the increasingly cynical and downright despondent mood of much of the country as the downside effects of the economic reforms have begun to sink in. Despite years of record-breaking economic growth that have made China the second or third largest economy on earth, the impact of what He Qinglian describes as the "marketization of power" and unbridled rent seeking by power holders in the state apparatus has created one of the most economically divided societies on earth. With a Gini coefficient that measures the gap between rich and poor as high as perhaps 0.59 (in most industrial countries it ranges between 0.3 and 0.4), China is rapidly becoming a society riven by class divisions, with consequences for social stability that only Karl Marx (and perhaps Mao Zedong) could appreciate.>sup>1>/sup> As the nouveau riche in the coastal areas while away their time, playing cards, engaging prostitutes, and purchasing mansions stocked with gold-plated furnishings, China's growing numbers of urban poor are finding it increasingly difficult to sustain even the most basic living standard. Laid off by bankrupt state-run enterprises that can afford to pay neither salaries nor health and pension benefits, China's new poor confront a desperate situation. This is especially true in interior cities, such as Shenyang, Liaoning province, where the benefits of "opening up to the outside world" are few and far between. Although the Chinese government has responded to the new phenomenon of un- and underemployment by experimenting with systems of social security and unemployment insurance common in advanced industrial nations, the impact of these rudimentary efforts, the author argues, has been marginal at best. Only in the relatively wealthy coastal areas, such as the Shenzhen Special Economic Zone, can the local government afford such endeavors.

Date: 2001
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